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January 2010

January 29, 2010

China's nitrogen problem

IATP President Jim Harkness is blogging from China.

Earlier this week I wrote about dinner with Cheng Cunwang, a sustainable food activist who IATP hosted last fall. Once Cheng returned, he began researching pollution from nitrogen fertilizers in China. His findings were released by Greenpeace China last week.

They haven’t put it on their web site yet, but among their report’s findings:

The cost of nitrogen fertilizer that runs off fields and is therefore wasted is 30 billion Chinese yuan ($4.5 billion) per year

This runoff constitutes a massive source of freshwater pollution, and as “non-point source” pollution, it is nearly impossible to control

Coal is the energy source for 70 percent of China’s nitrogen fertilizer production. Approximately 100 million tons of coal are used for this purpose each year—an amount that's increasing by about 10 percent each year

Following the release, I was interviewed by Southern Weekend (Nanfang Zhoumo), an influential paper published out of Guangdong. The reporter wanted to know whether China’s experience was unique, whether nitrogen fertilizer overuse is a problem in the United States, and what might be done to control it.

In a nutshell, the U.S. government has actually taken some important steps to reduce fertilizer overuse and pollution. Fertilizer management programs, use of cover crops (although still rarely used on the Midwest's larger sized farms) and letting land along watercourses lay fallow have all helped. (A great short paper on the perils of poor soil nutrition management appeared in Science last summer.) However, nutrient runoff from U.S. agriculture still poses a serious threat to U.S. waterways, a clear sign of which is the enormous dead zone in the Gulf of Mexico.

In both China and the U.S., the root problem is “cheap food” policies that subsidize over-production (of commodity crops in the U.S., and of fertilizer itself in China). The drive to increase yields at all costs—understandable in situations of extreme food insecurity—quickly builds economic constituencies for subsidies that prove difficult to dislodge once food security has been achieved. And cheap food has come to be seen as an entitlement by urban populations around the world whose other rights have been denied or eroded in recent decades. The problem is that a whole slew of externalities result from such policies, from the environmental and economic costs outlined in Cheng’s report to epidemic childhood obesity in the U.S. and the undermining of food security in poor countries—the destination of “surplus” commodities from the United States.

The result is that China basically has nitrogen coming out of its ears. For literally thousands of years, China’s farmers were able to maintain soil fertility through careful management of organic matter. They may not have known it was nitrogen they were managing, but farmers here went to tremendous lengths to retain, renew and recycle organic matter of all kinds. The advent of chemical fertilizers freed up lots of labor for China’s industrialization in the 1980s and 90s, but it turned animal and human wastes—once a prized resource—into a burden. Today manure is the largest source of freshwater pollution. The irony is that it is closely followed by the very nitrogen fertilizers that replaced it!

Looking at Davos through the Enron loophole

This week the bankers are throwing down the gauntlet to President Barack Obama at the World Economic Forum in Davos, Switzerland: don’t break up the “Too Big to Fail” (TBTF) banks or there will be “unforeseen consequences” beyond the past week’s flight of investors from financial markets. The bankers propose to defeat the anti-TBTF initiative—not under the bright lights of the coming U.S. electoral season, but in the negotiating rooms of the Bank of International Settlements in Basel, Switzerland and in preparations for the Group of 20 meeting in June in Canada. There, bankers can coordinate policy to ensure that TBTF Business As Usual may continue.

It is not clear what triggered President Obama’s decision to begin heeding the advice of his adviser, former Federal Reserve Bank chairman Paul Volcker. However, one of the targets of the “Volker Rule,” which would break up and rein in the TBTF banks, concerns a trading practice that resulted in the bank-induced commodity price volatility, which has damaged global food and energy security since 2007.

In proprietary trading (trading the bank’s own, largely borrowed, money), the banks, which have received a total $12.2 trillion of taxpayer bailouts as of December 2009, create and market financial products. Then armed with the knowledge of their own products’ vulnerabilities, they trade against their own clients’ investments, as detailed in a stunning article by Gretchen Morgenson in the New York Times. Short selling against commodities—e.g., in Goldman Sach’s commodity index funds—was among Goldman’s proprietary trading targets.

However, not all needed reforms are initiated at the presidential or intergovernmental level. On January 14, the Commodity Futures Trading Commission (CFTC) announced a rule to begin to close the nearly decade-old "Enron loophole," named for the company that had most ardently lobbied for it and than ruthlessly exploited it. The loophole exempts investment banks, hedge funds and energy futures traders from regulations that limit the number of futures contracts that can be held by any one entity at any one time. Trading without limits allowed oil-dominant commodity index funds to induce volatility in wheat futures prices (according to a June 2009 U.S. Senate investigation) as the index speculator “weight of money” overwhelmed the resources of traditional commodity traders.

Two of the five CFTC commissioners who voted for the futures contract limits acknowledged U.S. financial industry warnings that even the generous position limit rule would drive energy trades overseas, especially to their London branches. It almost goes without saying that proposals to regulate European markets are met with industry threats that trades will be executed in U.S. markets.

IATP, as a member of the Commodity Market Oversight Coalition (CMOC), commended the CFTC for beginning to close one of the most damaging loopholes to food and energy security of the past decade. On January 15, the CMOC and Americans for Financial Reform released joint principles for new legislation to regulate the over-the-counter (off-exchange) derivatives market of both commodity futures contracts and such notorious financial instruments of mass destruction as credit default swaps.

The U.S. Senate will hold hearings in February on OTC derivatives legislation to complement the The Wall Street Reform and Consumer Protection Act of 2009, passed by the House of Representatives on December 11. IATP will be working with the CMOC and AFR to close loopholes in the House bill that could continue to exempt nearly half of all OTC trades from regulation and leave them in “dark markets.”

The CFTC rule was published in the Federal Register on January 26. The comment period on the rule is open until April 26. IATP hopes both national and international allies will comment on this rule, which can be implemented without new legislation. Closing the Enron loophole will not only reduce runaway energy prices but also reduce agricultural price volatility, whether or not agricultural contracts are bundled into oil dominant commodity index funds.

For the bankers in Davos, a look through the Enron loophole would be instructive. The capacity of taxpayers, governments and workers to go into debt to pay for the damage caused by financial services industry deregulation is not infinite. Closing the Enron loophole, together with the implementation of the "Volker Rule" in legislation, cannot repair the damage already done, but can help prevent further pillaging of the real economy and its people.

January 26, 2010

Growing China's local food movement

IATP President Jim Harkness is blogging from China this week.

Tonight I had dinner with two rising stars of the Chinese sustainable agriculture movement, Cheng Cunwang and Shi Yan. Cheng was in the U.S. last fall as a guest of IATP, and he and Shi Yan have just finished translating Elizabeth Henderson’s classic Sharing the Harvest: A Citizen’s Guide to Community Support Agriculture, into Chinese. While in the U.S., Cheng made a pilgrimage to upstate New York to visit Ms. Henderson, and we talked about cooperating on an event to celebrate the launch of the Chinese edition later this spring.

Shi Yan is a graduate student at Renmin (People’s) University who we invited to spend a season working on a CSA farm in Minnesota in 2008. Her blogging about the experience caused a sensation in China, partly due to her infectious enthusiasm about farming and life in rural America, and partly because of the novelty of an intellectual traveling all the way to the U.S. to become a peasant. On her return, Shi Yan promptly started her own CSA, called Little Donkey Farm, on a patch of land in suburban Beijing.

Over dinner, she told me about the challenges of the farm’s first year and plans for this coming summer. Overall, last year was a success, and Shi Yan’s farm has proved as popular with the media as her blog from America was. (You can read out translation of a Chinese feature story on the farm here.) But there were problems, ranging from bugs and more bugs (Shi Yan and her fellow student farmers have limited training in organic pest control) to a local government that would rather sell the land to developers than have it occupied by a scruffy-looking farm. She got some help from the well-connected Dean of her school on the land-use issues, but it sounded like she was still worried about the bugs. Even her newfound celebrity has its downside. A passionate spokesperson for both organic farming and fair prices for “peasants,” Shi Yan has been taken aside more than once by owners of organic food companies who tell her Little Donkey’s low prices make them look bad and she talks too much about the rights of farmers.

As Little Donkey’s fame grew, all sorts of other CSAs, pseudo-CSAs and businesses who thought they had spotted a branding opportunity started to come out of the woodwork. Many wanted to use the Little Donkey name, and one company wanted to list Little Donkey on the Shanghai stock exchange. (This is more a reflection of the current go-go economy here than anything else, but still!) They decided to turn down most of the offers, but as soon as all three hundred of their own CSA shares for 2010 are sold, they will be referring people to two other farms that they think really do share Little Donkey’s CSA and sustainable farming principles. Meanwhile, she told me, she is providing advice to others all over China who want to replicate Little Donkey’s model.

The speed with which this idea is catching on in China is astounding, exhilarating and a little frightening, given the many ways that a good idea can get twisted into its opposite. It is in part a reflection of the anxiety of Chinese consumers about food safety and their wish to have more control over their food supply. But it’s also just one of a number of farmer responses to an agricultural economy in which more and more control is in the hands of agribusiness and farmers’ rights to organize into cooperatives to defend their economic rights are severely constrained. IATP’s China coordinator, Chang Tianle, and I are doing research on CSA and other related forms of direct marketing that should be out later this spring.

January 22, 2010

The first lady isn't done on healthy food

The White House garden wasn't enough for the first lady. On Wednesday, Michelle Obama gave a great speech to the U.S. Conference of Mayors on health and childhood obesity. She pointed out that truly innovative work is already being done to make healthier food more accessible to children in cities and towns around the country. As an example, she cited the mini farmers market project IATP helped set up with the City of Minneapolis to bring healthier foods to communities that lack easy access to fruits and vegetables.

Next month, she will help launch a major initiative on childhood obesity, putting federal resources to work for local partners around the country. She told the country's mayors that it will include: "increasing the number of `healthy schools' where kids have access to nutritious food; providing more opportunities for kids to be physically active; ensuring that affordable healthy food is available in more communities; and giving parents the information they need to make good choices for themselves and their families."

January 20, 2010

Organic agriculture and climate policy

Organic agriculture stores more carbon in the soil than conventional agriculture. It has fewer greenhouse gas emissions than conventional agriculture because it doesn't use fossil fuel intensive pesticides or fertilizers. Its combination of expanded soil fertility and flexible crop rotations make it more adaptable to the effects of climate change and, in the case of developing countries, may be better suited to produce more food. These are the conclusions of a new paper by the UN Food and Agriculture Organization, titled Organic Agriculture and Carbon Sequestration.

The FAO researchers also point out that the precise measuring of carbon sequestration for agriculture is not well developed. This is a problem for those pushing for carbon accounting standards that would designate agriculture as an offset market for polluters (IATP has been critical of this approach) and why most existing carbon accounting systems do not consider agricultural carbon sequestration. Those carbon accounting systems that do consider sequestration do not adequately consider the full contributions of organic agriculture, according to the FAO paper.

Despite these clear advantages, organic agriculture continues to be on the outside looking in when it comes to climate policy. At the global climate talks in Copenhagen, the new Global Research Alliance on Agricultural Greenhouse Gases emphasized the development of new technologies for agriculture. Organic agriculture wasn't mentioned. It's easy to be cynical about this: organic practices are knowledge-based versus techno fixes that are patent-based and benefit agribusiness companies.

Over the next four years, the U.S. Department of Agriculture expects to invest $320 million in climate change mitigation and adaptation research for agriculture. The USDA should read this new FAO report and make sure that organic agriculture has a prominent place on its research agenda.

January 14, 2010

Ideas for a healthier food system

If you were to redesign our food system to provide enough healthy, nutritious food for everyone, what would it look like? That's the premise of the latest issue of the Journal of Hunger and Environmental Nutrition, which includes contributions from leading thinkers on why public health goals must be integrated into agriculture and food policy.

IATP's David Wallinga, M.D., contributed to the journal's overview as well as a chapter on safety (or lack thereof) in our current health system. IATP's Mark Muller, along with Angie Tagtow, Susan Roberts and Erin MacDougall, offers ideas on how local, state and national policies could better support healthier food systems. The journal also includes contributions from leading researchers Mary Story, Michael Hamm and Tim Lang among others.

Reforming national policy is one place to take these ideas forward. House Agriculture Chairman Collin Peterson has announced he is already planning hearings in the spring to consider new ideas for the 2012 Farm Bill. The Child Nutrition Act is expected to come up for reauthorization in the next month or two, offering another opportunity to expand access to healthy food in school lunch programs.

But one of the common themes of the contributors is that there are public health benefits to food systems that are more community and regionally-based, and that local actions are essential for building a healthier food system. This remarkable issue of the Journal of Hunger and Environmental Nutrition shows us what is at stake, and what is possible.

January 13, 2010

Water consumption questions for biofuels—irrigated or non?

It is well accepted that consumptive water use in ethanol distilleries ranges from 3 to 4 gallons of water per gallon of ethanol, but this is only part of the story. Water consumptive use for crop growth differs by climate regime and must be differentiated between rain-fed agriculture—where irrigation, if used at all, may supplement rainfall only during periods of extreme drought—and irrigated agriculture, as practiced west of the 100th meridian (essentially west of the Missouri River for the northern states).

If one calculates ethanol water use on a “gallons per mile” basis (a hard term to use because it depends on assumptions and vehicle fuel efficiency) the values are startling—up to 62 gallons of water are used per mile driven if irrigated corn is used for ethanol production.

U.S. Department of Interior Secretary Dick Kempthorne, quoted in a recent issue of Ethanol Producer Magazine stated:“To reach our ethanol production target of 7.5 billion gallons per year by 2012 will require 30 billion gallons of water a year to process, or the amount of the annual water needs of Minneapolis, Minn. And if just 25 percent of the new corn crop requires irrigation, ethanol will demand more water than the combined annual usage of all cities in Arizona, Colorado, Idaho and Nevada. As we increase ethanol production, we must have a holistic approach that takes into account its impact on water supply.”

Yet, we are now slated for over 12 billion gallons of ethanol per year by 2012 and the U.S. already has a total capacity, as of September 2009, of over 13 billion gallons per year, which according to the Renewable Fuel Standard, is set to grow quickly to 36 billion gallons per year by 2022.

The title of a November 2009 GAO report stated it well: “Many Uncertainties Remain about National and Regional Effects of Increased Biofuel Production on Water Resources.” These uncertainties need to be better understood to ensure that biofuel production does not put our water resources at risk.

January 12, 2010

BCAP boondoggle

By Loni Kemp, a consultant to the Institute for Agriculture and Trade Policy

While the Biomass Crop Assistance Program (BCAP) designed to help farmers plant new energy crops languishes in administrative limbo (the BCAP that family farm, sustainable agriculture advocates and others fought so hard for in the 2008 farm bill) —the other BCAP has grown into a monster. What started out as a couple of paragraphs in the law to help pay for collection, harvest, storage and transportation of biomass has, under the hand of the U.S. Department of Agriculture's Farm Services Administration, morphed into another commodity entitlement program, this time for the wood products industry. I first identified these concerns in October.

Now, BCAP has caught the eye of the Washington Post, and the unintended ripples from the biomass subsidy program went public. It turns out that the vast majority of the 300-some renewable energy facilities approved on FSA’s BCAP list are pulp, paper and wood companies—most of which have burned their own wood wastes for energy for decades. Some have seen declining sales to biomass energy facilities which are now turning to cheaper energy supplies. USDA gave away $24 million last year in matching biomass payments, and announced they are giving away $514 million this year—the vast majority of which won’t support any new biomass or new renewable energy, but instead is free money for a struggling pulp and wood industry. They didn’t lobby for it, Congress certainly didn’t intend it, yet once the loophole was opened, the industry has come rushing in for it.

In a flash BCAP went from an estimated $70 million cost over five years, to $514 million in 2010 alone, and that is without the core program to help farmers plant energy crops.

Yet not all industry is happy. Composite wood manufacturers charge that BCAP is taking their feedstocks away by paying double the established market price for residual wood that can also be made into furniture, flooring and construction material, according to the Composite Panel Association. Others are concerned that established markets for all biomass are being destroyed, and will result in chaos when each facility comes to the end of their two year eligibility period.

How could FSA have gone so far astray? They seem to have interpreted the law itself in a number of unusual ways. They claim the program is an entitlement and that they have to make the full payments, despite the fact that BCAP says they “may”—not “shall”—provide payments of “not more than $45 per ton.” They could have limited payments to biomass with no higher-value products, no adverse environmental impacts from over-harvest and biomass not already being used for energy. The draft environmental impact statement failed to consider impacts from the matching payments. Requirements for biomass removal only under a Forest Stewardship Plan or conservation plan do not seem to be monitored or enforced.

The opportunity for the Obama Administration to fix all of these problems is at hand. A draft rule covering both the matching payments and crop establishment is going to be released in the next couple of months. While the money for 2010 will probably be gone by then, USDA could put in place requirements for a sensible program that furthers renewable energy without the pulp and wood products boondoggle.

January 11, 2010

The year to challenge corporate control in agriculture

After yet another decade of accelerated market concentration, there are fewer companies controlling our food system than at any time in history. The groundswell of energy and excitement for local foods and "growing our own" has been inspiring, but excess corporate control of our food system limits how much this movement can grow. This year, we'll have a chance to tell government regulators what we think.

The U.S. Department of Agriculture and Department of Justice are holding a series of workshops around the country on concentration in agriculture. The first workshop will be in Iowa on March 12 and will focus on the seed industry and other issues of concern for farmers. Other workshops will cover the poultry, dairy and livestock industries as well as margins (the difference between what farmers are paid and what consumers pay in the supermarket).

The workshops have already stirred things up in the seed industry. In an 18 page report submitted to the USDA, DuPont/Pioneer charged that Monsanto has monopoly control over the sector. Monsanto responds to the general allegations here. IATP submitted comments to the USDA and Department of Justice outlining key points we hope the workshops will consider, including the role of trade policies in driving corporate concentration. We also signed onto a comment by over 25 farm and food organizations focusing in on the problems of corporate control in the poultry sector.

A year-long series of workshops doesn't oblige the government to act. It's going to take a ton of political pressure to give government the backbone to take on Monsanto, Cargill, ADM and others. But the workshops are an opportunity to start building the political momentum necessary for a better food system that fairly rewards farmers and workers, protects the environment and provides enough healthy food for all.

January 08, 2010

The race for the world's farmland

The accelerated practice of land grabbing—where countries or corporations buy up agricultural land, usually in poor countries—is one of the most troubling responses we've seen to the sharp rise in food prices in late 2007 and early 2008. The Woodrow Wilson International Center for Scholars has published a valuable new book on the topic: Land Grab? The Race for the World's Farmland. It includes a diversity of perspectives on land grabs—including an article by IATP's Alexandra Spieldoch and Sophia Murphy on what this development could mean for food security and poverty reduction. Other articles cover potential "codes of conduct" for land grabs and regional case studies for Africa, Asia and Eastern Europe.

The NGO GRAIN is documenting land grabs around the world. Unfortunately, with rising hunger and energy prices we can expect this dangerous trend to continue.

January 05, 2010

Hunger and the human rights solution

As we step into a new decade, imagine we have an eraser to wipe away the tired yet relentless drive to further liberalize trade at nearly every corner—and instead, take a fresh look at what policies could help the over one billion people around the world without enough food to eat. How could we re-write trade and investment policies to support efforts by countries struggling with hunger to better feed themselves? How can we strengthen the resilience of agriculture to better adapt to climate change? How can we better stabilize highly volatile markets that make it so difficult for small scale farmers to make a living?

A new book, edited by FIAN's Armin Paasch and IATP's Sophia Murphy, makes a convincing case that by putting human rights, particularly the right to adequate, healthy food, at the center of economic and development policy we can better address hunger in the short and long term. The Global Food Challenge, with contributions by some of civil society's leading thinkers on food security and trade policy, outlines a series of proposals to integrate established human rights law into multilateral and bilateral trade negotiations. It includes chapters on trade policy, foreign investment, women's role in food production, speculation on agricultural commodities and climate change, and food security.

The book includes contributions by IATP's Alexandra Spieldoch and the UN Special Rapporteur on the right to food, Olivier De Schutter, among many others. You can read the Executive Summary and find the full book on our Web site.